ABIR ROY : Hello and welcome to our latest episode of Sarvada Vartalap. It's indeed been a while since our last Vartalap. But honestly, we could not have picked a better time to make a comeback of sorts because there have been so many developments in competition law in India, which every company should be aware of. So to analyze those developments, I have my colleague with me, Aman. Aman, welcome back to Sarvada Vartalap.

AMAN SHANKAR : Great to be back, Abir. I'm looking forward to discuss the enforcement trends.

ABIR ROY : So as I said, it has been quite an eventful year. If you look at the judicial hierarchy in India on competition law, you have the Competition Commission of India, the Appellate Authority being the National Company Law Appellate Tribunal, and the second appeal goes to the Supreme Court. So throughout the judicial hierarchy, there have been various decisions which every company which is operating in India must be aware of from a competition law implication. So Aman, if I were to ask you, what would you say are the top five headline points which every company must be aware of while dealing with competition law in it.

AMAN SHANKAR : So Abir, if I have to review the last year that has gone and the year that has been till May of 2026, I would say there are top five headlines would be for me - One, obviously, the cementing of the effects based analysis standard by the Supreme Court. Earlier, we only had NCLAT who had endorsed that as a standard for abuse of dominance. 

Number two would be the recent objective justification has now been formally taken and there has been a push by the CCI as a defensible ground for abuse of dominance cases. 

Number three would be the recent case where in our global MNC who are having a harsher India based policy compared to its other policies in other jurisdictions that was said to be in violation of the competition act. So this is a new kind of trend.

Number four would be CCI going a step ahead and taking Global Turnover as a benchmark for levying penalty or fines. 

And the last one would be for me the recent case of the hospitals after market wherein although the investigation report said that there is a lock-in-effect due to that and abuse finding was there in the investigation report, the CCI overturned that and took a different view. So it will be interesting to discuss these five cases.

ABIR ROY : That's a lot to discuss. So let's try unpacking one by one the five headline points that you mentioned. The first is obviously the Effects-based analysis. And now why this becomes important is that CCI’s in the past has taken, for a lack of better word, inconsistent findings. In certain cases, they said that even for an abuse of dominance investigation, there has to be a market effect. As in there has to be a distortion of market effect. And there have been cases where the CCI has adopted a per se rule saying that if there is a dominant player which indulges in one of the prohibited activities under section 4(2) of the Competition Act, it is per se illegal. So there was a debate going on in the competition law circles as to, which one would prevail, the per se rule or the rule of reason or the effects based analysis. The matter ultimately traversed all the way to the Supreme Court and now the Supreme Court has endorsed the finding that you need to have an effects based analysis. Because ultimately competition law, what is the problem statement if I may say so, for competition law in India is to ensure that there is no distortion in the market. Now if there's no distortion in the market by ipso facto it would mean that a rule of reason or an effect analysis has to be undertaken. 

So now the law is finally well settled after quite a lot of, I would say, to and fro from the regulators side and the appellate tribunal. Finally, the Supreme Court has said that even in an abuse of dominance investigation, you need to have a market effects based analysis. So that I would say is quite a relevant update, which every company which has certain critical mass as far as India's is concerned must be aware of.

AMAN SHANKAR : Now I think it's quite an interesting development if we even see the international jurisprudence that we are not shifting from purely form-based approach or per se approach to demonstrable evidence of AAEC in the market. And this has been a shift in the way CCI also approaches the abuse of dominance cases. The evidentiary standards definitely have gone up, whether it be for the conduct or the effects.

ABIR ROY : But like we always say, while the Supreme Court may decide or may put a stamp of approval for effects-based analysis, there's always follow-up discussion as to whether you need to look at an actual effect-based analysis or a likely effects-based analysis. And I'll tell you the reason why it came to the fore is that there may be situations wherein a possible conduct on an alleged conduct by a dominant player, may not cause actual market distortion today, but it may cause a market distortion in the future. 

So for example, if a big player in the market announces a policy which will be applicable say from January of 2027 or December 2026, we know that if the policy comes into practice, it will cause an effect. So the debate was whether you need to show an actual effect. because the conduct hasn't kicked in so the effects haven't kicked in. Or can the CCI being a market regulator which needs to protect the market interest, intervene even before the actual effects have kicked in on the standard of likely effects? So this debate was again discussed and deliberated and settled by the National Company Law Appellate Tribunal in one of the big tech cases was that the impugned conduct which is there must not be speculative, as in the example that I gave there was actually an announcement that something will happen in the future. So is the conduct itself is not speculative it will happen in the future but CCI can intervene being a market regulator which has a mandate to prevent anti-competitive effects to step in even based on likely effects. So what has happened is that there are two things which has happened - is that a while effects doctrine has been I would say endorsed by the Supreme Court, the National Company Law Tribunal has enhanced the effects doctrine to say both actual as well as likely effects can be seen by the CCI while doing competition or abuse of dominance investigations. So one needs to keep in mind, especially again like I said for a dominant player.

AMAN SHANKAR : So this is very interesting. There’s a fine line which the NCLAT has very meticulously drawn in the case that you’re mentioning that the conduct cannot be likely, conduct has to be a very concrete evidence based conduct. But yes, the effect of those conduct can take place in future and that's where the likely effect of the conduct comes into picture. And this also gives some amount of expansive power to pre-empt any market distortion by the CCI. So it's a very good precedent for the digital market or general market as well, which also brings me to the second trend or headline that we can see, is the evolution and endorsement of objective justification as a defensible groundby the CCI, how CCI in the past cases have analyzed it very carefully in a threadbare manner and have given companies those exemptions when there are legitimate commercial variables or well-documented rationale for their conduct. 

One case that I would like to discuss, which is a recent one, is the BookMyShow case. Now, in that case, there are a couple of things which were very interesting for this case. The DG report found that obviously the relevant market will be, and which the CCI also concurred, that the relevant market will be online intermediation services for booking of movie tickets in India. But what the CCI differed upon is that, CCI said that all the factors are fine, but when you talk about the dominance of this party, it may be having the first mover advantage, it may be having the capital to its disposal. Everything is there. The factors of 19 (4) are there. But when you talk about countervailing buying power, the CCI said that in these dynamic markets where there are other players also, most of these things doesn't fit well and the lack of countervailing power is not a very strong argument here, which also formed the base for later CCI finding that there is no abuse of dominance. There may be a dominance standard. 

Now let's analyze these abuse conducts. There are four conducts which have been there and how objective justification was taken as a standard test by the CCI here. So if I have to summarize, there are four conduct s which were under scrutiny by the regulator. One was regarding the seat or inventory reservation by BookMyShow. Number two was data ownership asymmetry between the parties. 

ABIR ROY : Sorry, I'm going to pause you for a second because we do have a lot of international audience which listens to our podcast. Can you just tell the audience what BookMyShow is, so that they also understand what kind of platform it is.

AMAN SHANKAR : Yeah. Yeah, sure. So  BookMyShow is a facilitator or an intermediary through which you can book online tickets. It's an online ticketing platform, not just limited to movie tickets, although this case was relating to movie tickets, but for other events or shows or movies, whatever. So it's an online intermediary platform. It's one of the biggest platforms in India right now. So the conduct was specifically relating to the cinema related part of it, wherein there was an allegation that there was differentiation between single cinema and the multiplex that is there. And four conducts were laid down. Obviously on the dominance part, CCI also aligned with the DG, apart from one exception, which I also mentioned. But on the abuse of dominance parts, CCI didn't find merit in the DG findings on all four conducts. So let us take each conduct one by one, but just to give a summary, as I was saying, one was relating to seat and inventory reservation. Number two was relating to data ownership asymmetry. Third was regarding revenue sharing discrimination or the convenience feed percentage that Bookmyshow gives to these movie theaters. And last one was relating to exclusive and restrictive agreements, wherein four closure effects were also alleged. 

Now, on the first conduct of seat reservation on inventory, the allegation was that in the tier two and tier three cities, Bookmyshow reserved certain

amount of inventory for them exclusively and then the process takes place. What the CCI found merit in and what was also argued by BookMyShow as an objective justification to their business was that in tier-2 and tier-3 cities, it's very difficult technologically to map the actual inventory on a real-time basis because the booking may happen through BookMyShow or any other aggregated platform or even physically. So it's very difficult to keep that tab. So from a BookMyShow perspective, this was very much needed to provide a seamless interaction to the consumer and also to prevent overbooking on the same seats. So it was a logical or a legitimate operational justification that the CCI accepted here. And that's why this allegation was dropped. Second allegation was leading to data ownership asymmetry. Now BookMyShow co-owns customer data with other multiplexes like PVR, but they only shared hashed data with single screen segments. So the conduct that was said to be was that it is amounting to unfair and discriminatory conduct as per section 4 (2) (a) (1) of the Competition Act. Now what the CCI found merit in and the reasoning also applies that CCI said that first of all to assess any conduct to be discriminatory you have to also see whether the parties whom we are alleging discrimination between are they similarly situated or not.

So the single screen cinema and the multiplexes differ. They are not similarly situated parties in terms of infrastructure, data security capabilities, operational cost, technical sophistication. So bearing all these things in mind, it's not that you can say that everything has to be done fairly between both these two parties because they are not similarly situated. So naturally the question of discrimination won't arise here.

But on the justification part, very much linked to it, the Commission also said, and noted that even though all these things of differentiation exist, which lies in favour of BookMyShow, even then on request of these single screen cinemas, BookMyShow do share those customer data as and when required, even though the agreement doesn't mention about that. So this was also accepted as a justification by BookMyShow and this allegation was also dropped. 

Third one regarding revenue sharing discrimination or the convenience fee related percentage sharing. Now BookMyShow 2 offers vastly different ranges of percentage or revenue sharing to different cinemas, whether it be for multiplex or single screen, even in single screens or multiplex, there are various standards and parameters. Now, again, similarly, the CCI first of all applied the similarly situated standard test for discrimination and said that multiplex and single screen can't be compared. This was number one. So the computation variance cannot be straight away looked from a plain vanilla angle.

Number two, also relied upon what was submitted by BookMyShow as an objective justification that this revenue sharing is not a plain vanilla formula that I will give X percentage or Y percentage to a particular cinema owner. It relies upon volume of sales, strategy location, the marketing cost, the cost of integration, amount of security deposit and the advance that has been given. And importantly, the commission also noted that BookMyShow shared up to 55 % with some single screen cinemas and at least 70 % with some multiplexes. So it undercuts the DG's clean narrative of systematic discrimination. There are a lot of factors that are taken into account and ultimately at the end of the day, should make business sense. You can't just demand something as a matter of pride because it's business. The business sense has to be there and from the records before it, the commission said that yes, there's definitely a legal merit on the legal arguments, but on the business side as well, there is a merit in what they're arguing in terms of how their revenue sharing model works. So this was also taken into account and CCI dropped the charges on this allegation as well. 

On the last point of exclusivity and... Yeah, sorry.

ABIR ROY : Yeah, you finish. I was just having one thought. So you finish and then I'll speak.

AMAN SHANKAR : So on the last point of exclusivity and restrictive agreements which was set to amount to market foreclosure. Obviously the CCI said that the conduct that was alleged was that BookMyShow shows exclusive agreements which are coupled with lock-ins and security deposits with a substantial number of cinemas effectively forecloses the market for other aggregators. The CCI obviously didn't find any merit in the exclusivity agreement and foreclosure based on the evidence was also not present because the market was still open for everyone to come in and play. But the justification or the objective justification test that was relied upon by the CCI, especially on the lock-in periods, was that the commission in a very nuanced manner rather said that the lock-ins are calibrated to the quantum of security deposit advanced by the parties or the cinema owners. Now, this is a legitimate credit recovery mechanism followed by bookmyshow. An entity that has advanced working capital to cinema needs to ultimately recoup it. So various standard tests have to be taken into account and should make business sense and ultimately this allegation was also dropped. 

So from this case, what we have seen is that on all the accounts of conducts, when there's a well documented reasoning, rationale, and there's an efficiency in the market that exists on date, CCI do take into account objective justification as a very strong defensible ground.

So for companies from a compliance perspective, from a defense perspective, it's very much important that you may be doing certain conduct, which prima facie may be in violation of the Act, but you have a very strong objective rationale for it, then it will work out well with the regulator.

ABIR ROY : It's so interesting just to because I was just thinking out loud and one of the reasons why we want our listeners to understand what BookMyShow does, it's at the end of the day an intermediary platform and most of the cases on antitrust not only in India when worldwide deal with platform economics. So one of the things which obviously and the timing of this case also the decision of the case by the CCI is after the judgment by the Supreme Court in Schott Glass where they endorsed the Effects based analysis. So what the CCI is actually when I listen to you I feel what they're trying to say is that even a dominant player because they said BookMyShow is dominant. So even a dominant player has a legitimate interest in protecting his interest.

AMAN SHANKAR : Yes.

ABIR ROY : So if I have a legitimate interest in protecting my business interests, and if I can show objective justification for any alleged conduct, it can actually be a very good core business strategy. This is defense strategy rather. 

AMAN SHANKAR : Yes.

ABIR ROY : And when I say core business defense strategy, obviously it has to be documented by way of contemporaneous emails, documents, well understood rationale which is there, which shows efficiencies in the market. Because at the end of the day, circling back to the first thing that we said is that one needs to show market distortion for an abuse of dominance investigation to stand. Now for market distortion obviously on the other hand would be objective justification. If I can justify the conduct based on various principles including innovation, protection of commercial interest, such kind of justification may be accepted by the CCI provided obviously it must be designed into the business models upfront. If you try to think about it later, obviously CCI will understand that it may or may not be legitimate for a lack of a  better word. So whenever a player which has attained a critical mass in the Indian market tries to do a practice, we always advise the clients, first go to why are you trying to do? What is the problem that you're trying to solve? And then demonstrate that by well documented commercial justification as a matter of compliance. So like I said, this becomes all the more relevant in platform economies because most of these platforms deal with various kinds of business users. Like you said, BookMyShow in the case that you mentioned dealt with cinema operators of various sizes, premises, various, I would say parameters which are there. Similarly, in other cases platforms may deal with business users of various, I would say various parameters. So if you want to do certain differences, on various kinds of users which are differently placed that may be objectively justified because that may not lead to discrimination. You have the case volume based discounts for example, these have been endorsed by not only by the CCI and international authorities based on objective justification that there is a well documented rationale for having certain kinds of discounts like volume based fidelity discounts which are there which have always been endorsed in the past. Obviously we cannot have a one-size-fits-all approach but having an overarching principle where we move away from a per se rule to a market effects based analysis coupled by objective justification, I would say it's a welcome step for global MNCs operating in India. 

I just realized it's already been 20 minutes and we have only covered two updates. So why don't we do one thing? We will split this episode into two parts where we will discuss the other three updates in a subsequent Vartalap.

AMAN SHANKAR :

Yeah. Sure.

ABIR ROY :

Thank you everyone for listening to us.